How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask TonyTax Your Own Question
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15975
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
Type Your Tax Question Here...
TonyTax is online now

Can anyone help? - If my company purchased a car

This answer was rated:

Hi, can anyone help? - If my company purchased a car for say £40,000.00 and sold it to me an employee for say £100.00 so I own the car and do not get taxed on it, is this legal?
Also If they then paid maintenance on the car and insured it, would this have an implication?

If you are sold a car by your employer at a discount to its value, there are tax and national insurance implications for you as the employee and for the employer as you can read starting here.

If your maintenance and insurance costs for the car are settled by your employer, again there are tax and national insurance implications.

These benefits should be reported in a P11D. If HMRC conduct a PAYE audit then it will come to light if they aren't reported and there could be significant financial penalties.

I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.

Hi thanks for this.

Can you advise on the approx tax / NI costs on the following then:?

Company buys a car for £40,000.00 and sells for £100.00 to and employee earning £60,000.00 basic.

Company maintains the car up to a cost of £2,000.00 p/a.


Assuming the car was sold to you as soon as the company bought it, there will be a one off benefit of £39,900 on which you will pay income tax of £15,960 (40%). The company will have a Class 1A NIC liability of £5,506.20 (13.8%).

Assuming the insurance is in your name and the maintenance bills are in your name, the sums paid directly or reimbursed to you should be put through the next payroll run and subjected to tax and NIC. You will pay tax on the £2,000 of £800 (40%) and employee NIC of £40 (2%). The company will have a Class 1 NIC liability of £276.00 (13.8%). Take a look here for more information on pecuniary liabilities.
TonyTax and other Tax Specialists are ready to help you
Hi again.
It's been a couple of days since I answered your question. Is there anything you need further clarification on?